Business

Ol’ Mark Pincus Had a Farm…

CITYVILLE SLICKER Mark Pincus on the terrace of his San Francisco apartment.

Zynga—the company behind such Facebook games as FarmVille, CityVille, and Zynga Poker—is the hottest topic in Silicon Valley: valued at $10 billion, with 250 million users and a rumored I.P.O. next year. Its C.E.O., Mark Pincus, takes fun very, very seriously.

This year, Mark Pincus, the founder and C.E.O. of Zynga—the company that created the silly Facebook games FarmVille, CityVille, and Zynga Poker, the most popular online poker game in the world—had plans to spend the whole month of March at his ranch outside of Aspen. Pincus, who is himself, along with his company, devoted to the concept of “play” in theory, practice, and also as an extraordinarily lucrative business model, was determined to have fun. “Aspen is just dialed in as a sports town,” he says. “You have skiing, hiking, road-biking, mountain-biking, golf, tennis … ” A slight five feet six, with large liquid brown eyes, Pincus looks down for a moment and purses his lips. “I have to say, though, I hate tennis here. The ball goes faster because of the altitude. It’s harder to win points.”

Not surprisingly, the month was whittled down to a week because of professional obligations—after all, Zynga, shockingly enough, has become one of the most buzzed-about companies in Silicon Valley, one that was just valued at $10 billion, with more than 250 million players a month, and is thought to be preparing an I.P.O. for next year. But Pincus was determined to make the most of his brief time off—skiing, hiking, and renting a snowcat for a reunion of his friends from his days at Wharton, some of whom had attended the birthday party he threw here a few weeks ago for 50. “We did a 1960s NASA-themed party,” he says. “It was like Wings—everyone was in space-themed costumes.” Pincus doesn’t think hanging out with a glass of Pinot Grigio with his feet up in front of the fireplace is fun; for him, fun is programmatic, something that should be well planned by an invisible hand—a game. “I even became so obsessed with the perfect wedding that I spent all my time deconstructing other ones,” he says, about his marriage to Alison Pincus, the co-founder of the popular home-design “flash sale” site One Kings Lane. “Toasts ruin weddings, so we had those the night before, but we allowed everyone only three minutes. Also, after dinner, we took the seats away—they all had to go on the dance floor.”

So, on this Wednesday in the middle of his Aspen week, Pincus has been having fun all morning, slicing down Aspen Mountain before barreling down his driveway for a late lunch. Plus, the most fun thing ever happened today: he became a billionaire, at least on paper. It’s an amazing feat for a guy whom, a close associate says, “no one in Silicon Valley wanted to touch in 2007,” and whose ideas a big game manufacturer turned down early on, “essentially throwing up all over them.” In the Valley, Pincus has been famous for 15 years, but he’s always been plotting his big score. “There’s an A-list [in Silicon Valley], and then there’s everyone else—and I’m not on the A-list,” he lamented to The New York Times six years ago, even after his first company, a wonky tech outfit, was sold for $38 million. Anyway, the Forbes list came out this morning, and there it was, finally, for everyone to see—Pincus, worth a billion dollars and counting. He’s one of the seven new “Facebook billionaires,” a group which includes all those guys from the Social Network movie—Mark Zuckerberg, Dustin Moskovitz, Eduardo Saverin, Sean Parker, libertarian investor Peter Thiel—plus Russian tech investor Yuri Milner.

Pincus’s BlackBerry has been pinging on and off throughout the day, with messages from friends and colleagues offering congratulations. “You know, I was hoping not to be on the list,” he says later, shaking his head a little. “I’m not looking to be famous for the amount of money I have, and it’s kind of socially awkward.” But from the glint in his eye, it’s clear that he isn’t exactly disappointed. After all, it’s a win.

In the tech boom’s second wave, there are a lot fewer companies than in the first, but vast chasms still exist between their profitability and their valuations. Some are currently throwing off revenue, like the online coupon company Groupon, which is essentially an e-mail-blast machine that promotes deals such as half-price laser hair removal at local spas, but others have smaller earnings than one would expect, like the billion-tweet media darling Twitter. The business-networking site LinkedIn is preparing an I.P.O., as is Facebook, which is on track for $4 billion in advertising revenues this year. That may not sound like a lot for a company that’s valued at $50 billion, but whom do you know who isn’t on Facebook at this point? They’ve got close to 600 million members, and their valuation could go over $100 billion. It could be the biggest I.P.O. in history.

Facebook’s success, on a business level, owes something to Pincus, although most people don’t realize it. The dirty little secret of Facebook is that there isn’t really much to do there once you’ve finished looking at pictures of your friends’ babies and your crush, and signed up for a few pages run by political causes. “Is Facebook a success because of Zynga, or is Zynga a success because of Facebook?” asks Michael Pachter, a video-game analyst at Wedbush Securities. “The answer is both. But the truth is that it’s a delicate eco-system.” Zynga’s games are expected to claim at least $850 million in earnings this year. David Kirkpatrick, author of The Facebook Effect, says, “Zynga could account for as much as 10 percent of Facebook’s revenues this year, a lower percentage than last year but still very significant.” “We’re going to have billions of people on social networks, so if a third of the people on Facebook love games, about a third don’t, and a third are indifferent, you’re still talking about hundreds and hundreds of millions of people playing Zynga games,” says famed venture capitalist John Doerr, of Kleiner Perkins, which has invested heavily in Zynga. “These games are not for everyone, it’s true, but it’s for more of everyone than anything else I know.”

Pincus’s games work off a few basic principles. They are easier to play than any other games in the history of man, except maybe Tetris. FarmVille, if you haven’t experienced it, is a game where you decorate a virtual farm with virtual goods, like rose beds, cows, and stallions. It’s less of a “game” than it is organizing a bunch of fake collectible goods on a computer screen, not that different from amassing a bunch of baseball cards. If unbelievably mindless, it’s definitely a good alternative to taking a Vicodin to chill out, and also provides a strange sense of achievement. What is amazing is that people (mostly women; 60 percent of the players are female) are willing to assign monetary value to these virtual goods. The other day, I paid two actual dollars for a fake “hot cocoa” shop to put in my fake city on CityVille, another Pincus game. I’m serious. With this miraculous sleight of hand, Pincus has answered a question that has long existed on the Internet: How do you get people to pay for things that are “real” only on a computer? “What Mark has figured out is just amazing,” says DreamWorks Animation C.E.O. Jeffrey Katzenberg, who became a member of Zynga’s board in April and has said that if he could start his career over “I’d be Mark Pincus.”

The other trick of Pincus’s games is that you have to come back to them at least every couple days, or you get punished—for example, if you don’t come back to harvest your FarmVille crops, they wither, die, and look pretty unpleasant (unless you buy a miraculous digital “unwithering” for about $1). If you don’t want to pay, you can sometimes opt to digitally “invite” some of your Facebook friends to play the game. Also, the more money you hand over in a Zynga game, the higher the levels of game play that are unlocked and the better the game becomes—the reverse of a traditional game.

On a recent evening in New York, Zynga threw an event at Deitch Projects, in SoHo, that felt like a party from 1999, with waiters passing out croissants on platters strewn with faux million-dollar bills, and gin drinks from the downtown faux speakeasy Milk & Honey. Photographs of Zynga employees’ dogs were wheatpasted to the walls—the company is named after Pincus’s beloved late bulldog, and every day is “Bring Your Dog to Work Day”—and some of the top Zynga “gamers” wandered around, showing off their high scores on their iPads. “I just love playing these games, because I love to decorate, and I feel like I’m an interior designer,” said a painter from Middlebury, Vermont. “It’s really easy. My mom has M.S., and even when she’s having a hard day, she can play it.”

A Zynga designer in a black leather jacket stood in the center of the room, sketching different houses for CityVille on a computer. “Everything is so tall in a city, and here we need to make it cute,” he says, “so I just squish everything down.” What did he do before working for Pincus? I ask. “Oh, I was a commercial architect,” he says. “A real one.”

Buying the Farm

Pincus may have skied this morning, but after a casual lunch of pizza and salad he’s ready for more exercise. His two nannies bring out his infant twin daughters, the blonde, blue-eyed Georgia and the darkly gorgeous Carmen, dressed in identical pink outfits, for a walk. “I met my wife, Alison, here in Aspen, but she was living in New York,” says Pincus. “The second we met, I said, ‘What do you think of the names Carmen and Georgia, because I’m not going to date someone long-distance if you don’t like those names.’ I know it’s a little weird.” He looks so happy with his babies, feeding them mush and cooing. “They’re more entertaining than anyone I know,” he says.

Pincus’s place is not the typical Aspen home: it’s a humble jumble of buildings in Woody Creek, a town about 10 miles from Aspen whose most famous resident was the late gonzo journalist Hunter S. Thompson. Pincus (who also owns a house outside San Francisco) wouldn’t want a house in the center of Aspen. He is not interested in being part of that scene. There are multi-million-dollar homes here, too, but there’s also a trailer park, and everyone calls themselves Woody Creatures. In his driveway, Pincus has about 10 beat-up cars in front of a small woodshop that he’s turned into a yoga studio, and an old barn where he used to keep horses, until they became too much work.

We go out the back door and up onto a plateau, with the babies in a two-seat stroller, and Pincus starts telling his story: he grew up in Chicago; his mother is an architect, his father a partner of a mergers-and-acquisitions consulting firm. After graduating from Wharton, in 1988, Mark became an analyst at Lazard Frères, joining the bank’s first program for post-college grads. “We slept five hours a night, and the rest was Lazard’s time—I don’t know if I had a day off in my first six months,” he says. After Lazard, Pincus made a brief stop in the Asian markets. “It was so 19th-century,” he says. “I showed up in Hong Kong with nothing but a slip of paper on which a Lazard partner had written the name of a guy who could give me entrée to the banking world.” Then he enrolled at Harvard Business School. He was the only person in his section to graduate without a job, he says. “Even if I’d wanted to work at Goldman Sachs, they weren’t going to hire me, because I was saying things like ‘That’s a dumb question’ when I was asked something stupid in the interviews. I just didn’t have a lot of respect for authority.”

Pincus was reading right-wing theorist George Gilder’s books on the emerging world of technology at the time, and he decided that he wanted to be in media. “I was in banking because it was high-paying, intense, a real meritocracy, and the afterwork part was fun, but I found everything to do with banking so boring,” says Pincus. He flew himself to Denver for a 15-minute interview at TCI, the enormous cable company; it turned out that the company’s C.E.O., John Malone, was having dinner with Gilder that night, so being familiar with Gilder’s theories helped make the interview go well, for once. “TCI had this box where they were throwing every opportunity that wasn’t a cable system, and they put me in charge of that box,” says Pincus. He wrote the business plans for the Auto Channel and TV Guide Onscreen, and came up with crazy new media-related ideas on his own—the Disaster Channel, with feeds from war-torn areas, like a Chechen helmet cam.

Pincus made another stop, at a venture-capital firm in D.C. in 1994 (“All these preppy U.Va. guys would send me home when I’d refuse to wear a tie or khaki pants, and I’d be like, ‘Really?’ ”), but was soon fired. “At 28, with all my friends at Goldman Sachs or hedge funds, I found myself washed up,” he says.

A year later he had a stunning reversal of fortune. With a friend and a “guy who slept on the couch,” he created Freeloader, a “push technology” company, which downloaded Web pages for dial-up customers, presenting them at broadband speed—and sold it for $38 million.

It was one of the first big Web-company sales, and Pincus became a pre-Web 1.0 star. Napster’s Sean Parker worked for him for a summer. But in the late 90s, with his relentless focus on revenues, Pincus decided to tack differently from the rest of the pack in the tech boom and created Support.com, a “boring” remote-software-support company. (It went public in 2000, netting Pincus $30 million, according to an industry source.) “When I went to make presentations, the V.C.’s were always like, ‘Can you make this [presentation] shorter [because] this really exciting company is coming in after you?’ ” says Pincus. “Finally, we hit an inflection point, and they said, ‘This could be a massive company,’ and I’m like, ‘I’ve been telling you that,’ and they’re like, ‘You’ve never run a large company, so we need to replace you.’ They went on a witch hunt, having one-on-ones with my team, whispering, ‘The board is very concerned about Mark. Do you see problems with him?’ ” He sighs. “And I had sharp edges, it’s true. The V.C.’s would all be on their BlackBerrys, and I’d say, ‘Yeah, you’re not allowed to come to a board meeting anymore with those.’ And I was 32.”

But the next half-dozen years would prove far rougher for Pincus. He worked on a series of projects, like Tribe.net, a social network which was ultimately taken over by devotees of Burning Man, the annual festival in the Nevada desert that Pincus regularly attends. “On the Web, whenever you have an open-ended community, it will basically turn into porn, and with Tribe, the hard-core Burning Man crowd uploaded pictures of themselves naked,” he says. “My girlfriend at the time was this blonde, preppy, granola Marina Girl, and she was frightened off so fast by hairy, freaky guys who were sending her pictures of their balls.”

Even with millions in the bank, a comfortable existence by any account, Pincus believed he was failing as an entrepreneur. He went to motivational coach Tony Robbins’s retreats—“It was me and 4,000 out-of-work Realtors”—and began working with another life coach whose clientele includes many Internet entrepreneurs. “I got so into coaching that I used all my spare time to get coached,” he says. “I really thought to myself, If I’m going to do anything in this world, I am going to be the best I can be. I have a tennis coach that has taken me as far as my body can go. I hired a private skiing coach during my birthday week. I have a private yoga instructor. I just don’t understand why you wouldn’t give yourself every advantage.”

Pincus began to think about gaming in a different way after being coached. He was always a game player. “Video games and outdoor sports, that was my childhood,” he says. His family was so competitive that they would throw out the board to Trivial Pursuit and just ask one another the questions. “My parents were so into Scrabble that they invented new rules because they didn’t like the variability in the luck of the draw of the tiles,” he says. “They had a rule that you could change the words on the board as long as you didn’t take the letters off.”

Now he started to think about what would happen in games if you could, essentially, pay for a coach. Why couldn’t you gain an advantage in games by paying for it? “I was addicted to this online game, Rise of Nations, where you move your nation through civilizations, to the point that it really hurt a relationship I was in,” he says. “These kids online were just destroying me—they were coming in with tanks, and I was throwing spears at their tanks. And I thought to myself, Wow, I would really pay some money to not have it be this way.” Most of us would think of this as cheating. “It’s breaking the rules of the Western ways of gaming to buy your way ahead, but so what?” he says. He’s got a point: why do games have to be fair? After all, in life, everything is easier if you throw money at it. It’s all easier then. You knew that already.

Easy Marks

In fact, Zynga games are hard to play without spending money. “In the game community, Zynga games have created quite a controversy,” says Eric Zimmerman, a veteran game designer and a professor at N.Y.U.’s Game Center. “Their detractors see them as interactive Muzak, with the trappings of games but not the soul, and at worst deceptive and manipulative, intentionally creating an addictive experience to trick players out of their money and have them buying virtual goods to no good end.” He sighs. “But I think that, by virtue of the fact that these games are as enormously popular as they are, there’s something there. After all, millions of flies can’t be wrong—if they’re buzzing around shit, they’re getting something from it.”

Pincus has stirred up some controversy as well—a video capturing him talking about doing “every horrible thing in the book” to get revenues early on at Zynga has been passed among Web cognoscenti—and his relationship with Facebook, even though Pincus was an early investor in the company, has been strained at times. About a year ago, Facebook restricted how Zynga and other developers could inform non-players of their friends’ game usage (Vanessa just found a Reindeer eating from their feed trough!), which limited Zynga’s exposure to potential new customers. Then, last May, Mark Zuckerberg insisted that Zynga use its new currency, called “Facebook Credits”—and give them a 30 percent cut of crocuses, cows, etc. Credits are one of the primary ways that Facebook hopes to make money; imagine if Steve Jobs had thought to mint his own currency for his apps.

Pincus, who already felt that he was giving Facebook a lot of money as its primary advertiser (he reportedly spent an estimated $72 million last year), hit the roof and threatened to pull his games. But he knew Facebook held most of the cards—how else would he attract 250 million people to Zynga games? The two Marks sat down and hashed out a plan. “The reason that Facebook and Zynga were able to strike a deal is because Mark and Mark did it one-on-one,” says a source close to the companies. This allowed Facebook to show other vendors that Zynga, the big dog, had accepted their terms, and that the rest should follow suit. “Zynga truly has an insurmountable competitive advantage so long as they don’t anger Facebook,” says Pachter, the video-game analyst. “And I don’t think Zuckerberg is going to single them out—he really has a vision that he wants everyone to thrive.”

“Mark and I are definitely friends,” says Pincus now. “I think it’s because of the personal relationship we have that the companies have been able to build so much trust and work together through … lots of tough times.”

There it is again, that glint in Pincus’s eye. Competitors may be nipping at his heels, and some games are dropping in usage, but for now he’s winning. Things couldn’t be going better, and he knows it. “I like that I’ve lowered the bars to fun on the Internet,” he says. His bet is that all Web services will eventually look and feel like games. “Users will gravitate to the ‘funnest’ e-commerce or other sites,” he has written. “Game mex [mechanics] will be the most valuable skill in the new economy.”

Pincus is crossing a street with his twins now, and he turns around and surveys the landscape of iron-ore cliffs. A neighbor, a fellow Woody Creature, drives by in a Jeep and jumps out to give Pincus a hello. He points at the twins in the stroller. “Hey, where’d you get those two cuties?” he says. “From the farm?”

“No,” says Pincus. “These ones are real.”

correction: The original version of this article incorrectly stated that Mark Pincus’s home outside San Francisco formerly belonged to Jefferson Airplane. We regret the error.